LIVE UPDATES: Fed Chair Jerome Powell to deliver major speech at Jackson Hole
On Friday, CLSA analyst Piran Engineer upgraded Bandhan Bank Ltd (NSE:BANH). (BANDHAN:IN) stock rating from Outperform to High-Conviction Outperform, maintaining a price target of INR 220.00. Engineer’s assessment is based on the expectation that the Indian microfinance sector is poised for a turnaround, projecting an improvement from "bad to less bad" within the next one to two quarters, and a return to normalcy by the second quarter of the fiscal year 2026.
Engineer noted early signs of recovery in the bank’s collection efficiency, which if sustained, could lead to an improvement in slippage figures with a quarter’s lag. According to the analysis, Bandhan Bank stands to gain significantly from the expected sector recovery due to its superior asset quality performance compared to its peers.
The upgrade comes despite a 20% decline in the bank’s stock price over the previous three months. CLSA’s confidence in Bandhan Bank is further bolstered by a nearly complete overhaul of the management team, which reduces the risk of financial restatements commonly referred to as ’kitchen-sinking.’
Engineer’s report underscores that the bank’s stock is currently trading at an undemanding target multiple of 1.2 times, suggesting a 65% upside potential. The analyst believes that the stock is set to rebound as the microfinance sector’s conditions improve. Despite the unchanged estimates and target price, the upgrade in the stock rating reflects CLSA’s heightened conviction in Bandhan Bank’s prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.